Merchant Generators Wait for Legislature in FL

A month has gone by since a special commission formed by Florida Gov. Jeb Bush recommended that the state break up its monopoly utilities and pave the way for competition in the power generation market, but still there has been no word from the legislature. There have been signs that the state senate will move much slower than previously expected on electric restructuring because of growing awareness of what can happen when power planning goes awry.

Duke Energy said it's still optimistic a bill addressing merchant generation will surface in the next few weeks because of the state's tremendous need for new generation. A state supreme court rejection of Duke's proposed New Smyrna Beach plant has been the main obstacle to development. Only new legislation will pave the way for power producers to build plants in Florida to compete with utility generation.

"I think right now what you're seeing is a case of everyone looking at California and being a little bit nervous," said Duke Energy's Richard Hyde, regional director of government affairs. "We remain very optimistic that at the end of the session, which is the end of next month, there will be legislation passed that will allow merchant plants such as Duke's to be built in the state of Florida. There's a little bit of nervousness about some of the items in the 2020 energy report. But we have seen in the past year a general understanding that there is a need for more generation in the state."

Hyde said there have been far more "caution flags waved" on the retail side than on wholesale generation issues, which is one of the main reasons the Florida Energy 2020 Study Commission put out its interim report last month.

The Florida Energy 2020 Study Commission approved a plan that would result in a "systematic transition to a competitive wholesale market, but [would be] designed to avoid the problems experienced in California." The plan, which was submitted to the Florida legislature this month, recommends the removal of statutory barriers to entry for merchant power plants and provides a transition to a "level playing field" for all generation assets (see NGI, Feb. 12).

"Electric restructuring is extremely complex and even more so in Florida, the way some of their laws are written," noted Duke spokesman Rick Rhodes."It's a big piece of work for any governing body to take on. They have the [Energy 2020 Commission's] recommendations. We're only a small portion of what they will look at."

A spokeswoman for the state Senate Committee on Regulated Industries said that so far there have only been "placeholder" bills on the house and senate sides with very little discussion on the key issues to date. "At this time we really don't have anything that has come up," she said. "We discussed the 2020 Commission report, and had a training session to bring the senators up to speed on electric restructuring in general. We had a counter-point meeting with the public service commission chairman. But that's all. There are five more weeks left but there's no telling whether it will resurface right now." Rocco Canonica

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